Correct Option
The correct option is D. In both the cases (UPI and Digital Rupee), the liability lies with the users and their respective banks.
[as per provisional answerkey]Explanation
The Unified Payments Interface (UPI) and the Central Bank Digital Currency (CBDC), also known as the Digital Rupee (e₹), represent two distinct forms of digital financial infrastructure. UPI is a payment system that facilitates the transfer of commercial bank money, whereas the Digital Rupee is a digital form of legal tender issued by the Reserve Bank of India (RBI).
- Statement A is Correct: UPI is a real-time payment system (RTPS) that enables instant fund transfers between bank accounts. The Digital Rupee is a digital representation of sovereign paper currency, possessing the same value and legal status as physical cash.
- Statement B is Correct: In UPI, a transaction involves the movement of funds between two bank accounts, requiring an inter-bank settlement process. In contrast, the Digital Rupee is a bearer instrument. When it is transferred from one digital wallet to another, the transaction is final and instantaneous without the need for inter-bank settlement, mirroring the physical exchange of cash.
- Statement C is Correct: UPI transactions are intermediated by banks, and every transaction is recorded in the core banking system (CBS), appearing in the user's bank statement. Digital Rupee transactions occur directly between wallets; while the RBI maintains a ledger, these transactions do not appear in the user's traditional bank account statement as they do not involve bank account balances.
- Statement D is Incorrect: This statement is factually wrong regarding the nature of liability. In UPI, the liability lies with the commercial banks involved. However, in the case of the Digital Rupee, it is a direct liability of the Central Bank (Reserve Bank of India), just like physical currency. The user holds a claim against the RBI, not a commercial bank.
3. Key Takeaway
Key Takeaway: The fundamental distinction lies in the nature of the liability; UPI involves commercial bank money where the bank is liable, whereas the Digital Rupee is sovereign money where the liability rests solely with the Reserve Bank of India.